LCH has added its first Australian Protected Payments System (PPS) Bank, part of an upcoming APAC expansion.

LCH, a group of global multi-asset clearinghouses, has added the Commonwealth Bank of Australia (CBA) as its inaugural Australian Protected Payments System (PPS) Bank, helping engender Australian dollar (AUD) payments locally, according to an LCH statement.

LCH boasts a diverse group of venues, liquidity providers, and banks in its comprehensive scope of operations. The addition of an Australian PPS Bank does garner additional benefits however, given the advantages of making and receiving AUD payments in the local timezone, arguably one of the biggest challenges facing many groups in the Antipodes.

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APAC Expansion

LCH relies on PPS systems, which results in the calling and paying of cash margins to its clearing members. The addition of the CBA helps LCH achieve this in region, however PPS systems are prevalent globally. Per LCH’s membership criteria, members are required to maintain a PPS bank account – these in turn are overseen by the Bank of England (BoE), which has been active in London for over two decades, as well as in New York.

The latest addition of CBA also follows on the heels of an established LCH’s central bank account with the Reserve Bank of Australia (RBA) back in 2015. The group has also eyed more Australian banks to its system in the coming months, ultimately widening participation to additional members.

Gerard Smith

According to Gerard Smith, Director of Collateral Services, LCH, in a recent statement on the membership: “Signing Commonwealth Bank of Australia as our first Australian PPS bank generates more flexibility in making and receiving cash payments in the local timezone. Asia Pacific is a region of strategic importance for LCH and we understand the importance of engaging with local partners to offer the best possible service to our members and their clients.”

“We’re delighted to be the first Australian bank to offer PPS services to LCH. Clearing has gained significant momentum in Australia in recent years and this initiative makes posting cash collateral at LCH more flexible than ever before,” noted Andrew Hinchcliff, Executive General Manager, Markets, Commonwealth Bank of Australia, in an accompanying statement.